March 25, 2019 at 3:24 pm #81913
I m interested to get your ideas and vision how do you see the process and time frame of the new organization of the new company ?
At which point of time should start the selection process? ( before the 2 entities are legally merged or after?)
What is your opinion regarding involving external consultants within the selection process ?April 7, 2019 at 4:15 pm #82650
I’m not an HR officer, but I was thinking about almost the same questions. I think HR is among those who should first join the transaction and the last to leave. The big issues are associated with high positions as one officer will be needed in a post-merger function/segment and one or two officers to deputize. High position officers start looking around for other entities and they leave as soon as they can if the management did not communicate them to stay specially those with high potential to achieve. The direct answer from my point of view for the selection process is “before the 2 entities are legally merged”. Wrong or delay in the communication and selection may cost a lot as the entity may lose big size portfolios with qualified/experienced/reputable officers leaving the company because of miscommunication.
External consultants for HR function is helpful but not essential. The more information and analyses HR has about the employees the less the need to HR consultants.April 17, 2019 at 9:21 am #83302
I think Organisational Design should begin at due diligence stage before legal merger and carries through to the integration phase. Once merger is legal and complete I have seen appointments have been done well they have been quick, top-down, de-duplicated like for like roles and mapped competencies to the individuals. They have also been communicated well and staff have been consulted appropriately.May 6, 2019 at 6:01 pm #84096
I think the organizational considerations should begin early as it will help make sure the design is aligned with the purported goals. As you go through the process and discover there is room for change and flexibility where it is needed to maximize value , but getting in early allows for a great view on the data that is being collected. HR should also stay, longer to ensure that the processes and people are being considered throughout the stages and into completion.May 17, 2019 at 6:35 pm #84741
I also agree that HR should be involved very early in the due diligence, not only from an org design standpoint but the analysis of cultural fit, insights into cost/benefit analysis and provide insights into what may come in the integration so that it can be planned accordingly. Communication and comms planning is also a key benefit of having HR at the table early days. For us, HR is also involved in the integration well after all the other departments – I would say it goes at least a year after the integration date or acquisition date – it is very likely that everything will be new for the acquired employees for that first year – how performance, compensation, etc is managed. HR has a key role in creating clarity for managers and employees well after the deal is complete.January 3, 2020 at 9:28 pm #103655
HR should be involved at an early stage to ensure the merged entity will not encounter issues down the line relating to motivational issues such as pay scales and promotion opportunities.
Having HR representatives from both companies sit together and identify areas of concern early can help build towards an amicable solution which would not derail PMI efforts. Clear communication around agreed changes can be sent to all employees, and an element of “give and take” can help build goodwill to make target company employees feel that a new regime is not simply being imposed on them.
Cultural fit surrounding HR policies (from dress code to promotions, job title to holiday entitlement), if not handled correctly, can lead to a sense of “them versus us” which can be difficult to reverse.January 6, 2020 at 7:39 pm #103841
In my experience, we have always had HR leadership at the table in due diligence. Typically HR and the target leadership work together to determine what employees are critical to retain in the long term and in the short term. That allows us to perform the following:
1. On day 1 we have welcome letters for everyone stating their title and salary. We do a market analysis on their salaries and occasionally they will receive an increase if needed.
2. Anyone who was identified to be needed in the short term, that timeframe is communicated to them and we often offer a retention bonus that if they stay through that time they will receive from the acquiring company.
3. Anyone who will not be staying on, it will be communicated to them on day 1 and we will have already negotiated whether the target company or the acquiring company will handle their severance pay. It has always been best practice to communicate early and anyone who is not retained should receive severance and feel they were treated fairly. You don’t want the acquiring company to get a reputation for coming in and not taking care of employees.January 14, 2020 at 4:09 am #104408
It’s been interesting seeing what other people and organizations have been doing for this. Our process for my most recent M&A was different than most. We had the HR leadership identify the FTE count to be able to support the combined organization using the centralized structure already in place and an activity assessment from the organization we acquired because we didn’t know how many people were actually doing HR work in the field locations. After that was identified, the individuals who wanted to could apply for a role, interview, and all selections were announced at the same time frame. Due to our agreement, we weren’t allowed to have any organizational structure discussions prior to close, so all of this occurred (for HR) between July – September with people transitioning into their new roles in November, new pay/title/structure in January. As part of the financial goals of the merger, an FTE savings was expected – so we did have to keep that in mind.
Some of the other M&A activity I have been involved with was similar to Corynne’s comment above, but those were smaller acquisitions and there wasn’t really any overlap in roles and there was no FTE reduction expectation.
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